US embassy cable - 05BRASILIA1544

UNCLAS BRASILIA 001544 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: PGOV, PREL, KCRM, SOCI, BR, External Relations 
SUBJECT: BRAZILIAN PRESIDENT AT GLOBAL FORUM VOWS TO CRACK 
DOWN ON CORRUPTION 
 
REF: BRASILIA 1494 
 
1. (SBU)  Brazilian President Lula da Silva used the occasion 
of the Fourth Global Forum Against Corruption, being held 
this week in Brasilia, to announce a firm response to the 
wave of corruption scandals that has been battering his 
administration in recent weeks.  As noted in reftel, the GoB 
has been beset by corruption allegations reaching into 
several cabinet ministries and allied parties since mid-May. 
Lula's impulse has been to react slowly and not to "respond 
to the headlines".  In the case of Congressman Roberto 
Jefferson, president of the allied PTB party, Lula became 
involved in machinations to quash a congressional inquiry 
into charges that Jefferson appointees at the Postal Service 
and the Brazilian Reinsurance Institute (IRB) took kickbacks 
and skimmed money for PTB party slush funds.  Another bomb 
dropped this week as Jefferson, now in a purely defensive 
mode, alleged to the press that the treasurer of Lula's own 
Workers' Party (PT) paid US$12,000 per month to buy votes in 
Congress over the past year. 
 
2. (SBU)  This allegation appears to have been the final 
straw for President Lula.  Giving the opening remarks at the 
Global Forum on June 7, Lula seemed galvanized to put an end 
to press criticism and the bickering within his 
administration and coalition.  Speaking before his entire 
cabinet (who reportedly got last minute command invitations) 
and the hundreds of assembled Forum participants, Lula 
announced that the presidents and directors of both the 
Postal Service and the IRB have been sacked, and that he and 
the PT party will welcome Congressional and law enforcement 
investigations into all allegations.  Lula's tepid response 
to the serial corruption had been alienating to many old-line 
PT members who are still committed to the party's reputation 
for probity.  In an effort to regain their confidence, he 
announced that the government "will not protect anyone" even 
if that means "cutting its own flesh".  Beyond the Postal 
Service and IRB officials fired, the PT party treasurer, 
Delubio Soares, seems likely to lose his job.  Left hanging 
are the fates of two cabinet officers:  Central Bank 
President Henrique Meirelles and Social Security Minister 
Romero Juca who, separately, have criminal corruption charges 
pending before the Supreme Court.  Lula is reportedly 
reluctant to remove Meirelles for fear of the impact on 
financial markets; though he is looking for a deal with his 
coalition that would allow him to fire Juca, of the allied 
PMDB party.  Post will follow with further reporting on 
Global Forum events via septel. 
DANILOVICH